Question

Please thoroughly explain how the manufacturing company General Electric relates to basic accounting. Please do not provide a short answer, if so then it will not be accepted.

Answer 1

The operations of manufacturing company General Electric are very complex and to record the same in financial terms basic accounting is needed.

General Electric first purchase raw material and use their manufacturing processes involving labor and other overhead cost to manufacture their final product. The Inventory cost include cost of purchasing raw material, cost of labor used to convert the raw material into finished products and other cost which are required in the production process. These other costs are known as overhead cost

The capitalized inventory cost of manufacturing includes all cost that are required to bring the inventory into saleable condition.

To record all the operations starting from the manufacturing to sale of finished goods then record the same and then distributing dividend to shareholders this all required accounting. Without the help of proper recording of transaction of business no company can run as they will not be aware whether they are in profit or loss and who are their receivables and payables, what tax is required to pay, whether they are in a position to declare and pay dividends to its shareholders and whether they can pay off their debts.

Basic accounting involves recording of each and every small to big financial transaction happening in the company. Basic accounting helps any organization in the following way:-

· Records and maintain all the transactions which are done in any organization.

· Gives monthly and continuous result for example cash budget can give forecast about whether any organization is cash enrich or it has shortage of cash. No budget can be made without the data recorded in accounting.

· Gives income for the year and Financial position of any organization for year to year so that one can compare and improve itself.

· Provide data and result to external user of financial statements like shareholders, banks etc.

· Provide all list of account receivable and payable and also how much loan if any taken is due.

As per the above explanation we can conclude that general electric a manufacturing company is related to accounting as it also needs all these information and statements so that it can continue its operations.